Decarbonization Focus is Fuel for Renewables

The push toward decarbonization has accelerated significantly over the last two years and is now a global imperative. We believe the power generation sector represents the single largest global decarbonization opportunity today—and renewables are leading the charge.

The charts below show the increased commitments to achieving net-zero carbon dioxide emissions, across countries, companies and the financial industry. The goal is to reduce and balance global emissions enough that the global temperature rise over the next few decades is limited to a target of 1.5°C.

The global focus on decarbonization was evident at the recent United Nations Climate Change Conference (COP26). Twelve countries out of the largest 15 global emitters of carbon dioxide committed to achieving carbon neutrality, either by 2050, 2060 or 2070. At COP26, the developed world also showed strong initiative to fully phase out coal—the “dirtiest” fuel when it comes to emissions—as a source of electric generation over the coming decade. John Kerry, the U.S. Special Presidential Climate Envoy, affirmed that by 2030 the U.S. will phase out all coal generation. Although we find this very ambitious, the initiative may lead to an aggressive roll out of renewable generation in the U.S. over the coming years.

From the private sector perspective, earlier this year, 450 financial institutions across 45 countries committed to managing their more than $130 trillion in assets to help achieve the 1.5°C temperature-rise limit, as part of the Glasgow Financial Alliance for Net Zero.

We believe the success of all decarbonization strategies will ultimately be measured by their ability to decrease levels of global greenhouse gas emissions. And for this, we believe increasing reliance on renewable generation, as quickly and pragmatically as possible, is critical.

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